Global airlines are owed $2.3 billion by governments around the world, depriving the aviation industry of much-needed cash, risking reduced air connectivity and damaging investors' perceptions of these economies, the International Air Transport Association (Iata) said on Sunday.
The amount of airline revenue prevented by governments from repatriation has jumped by 47 per cent in the last 12 months, the industry body said at a press briefing in Istanbul.
Nigeria remains the top country where airlines' revenues are stuck, with $812.2 million. Bangladesh followed with $214.1 million, Algeria with $196.3 million, Pakistan with $188.2 million and Lebanon with $141.2 million, Iata data showed.
Algeria has been “slow” in releasing funds, while Lebanon is facing a “complete collapse in the financial industry” but is still working with Iata to resolve the issue, Kamil Al Awadhi, regional vice president of Africa and the Middle East, told reporters at the 79th annual meeting of Iata.
Nigeria has been responsive to Iata's prompts to address the problem until about six months ago, with the election of a new government, he said.
“They still have to look at what they're doing to their own economy and to the aviation industry,” Mr Al-Awadhi said. “This is beginning to bite.”
Blocked remittances have plagued airlines for years but the situation has been exacerbated by the Covid-19 pandemic, which left airlines strapped for cash after about three years of weak travel demand.
“Airlines can't keep funding this … the aviation industry just came out of the worst disaster ever seen in the 100 years it existed, that means they've come out with very little cash, every penny counts now and they can't wait,” Mr Al Awadhi said.
Nigeria's continued blocking of funds is putting airlines in a “tighter position”, with some carriers forced to temporarily suspending or reducing services, because they cannot continue to fund these operations, he said.
Nigeria's decisions to continue blocking funds reduces air connectivity, creates negative perceptions about the business environment, raises ticket prices, discourages investors and hurts the country's travel agents' business, he added.
The Iata official said he hopes the new government in Nigeria will take “positive measures to remedy” the problem as soon as possible.
In March, Emirates airline said it was owed a “substantial” amount in ticket sales revenue by Nigerian authorities, with little progress made so far in repatriating the blocked payments from Africa's most populous nation.
Nigeria's airline issues began in March 2020, when demand for foreign currency in the country outpaced supply and its banks were not able to service currency repatriations.
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Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
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Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
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